Question 1

The federal government sets the poverty line at roughly

Accepted Answer

A)  five times the cost of providing an adequate diet. 
B)  four times the cost of providing an adequate diet. 
C)  three times the cost of providing an adequate diet. 
D)  two times the cost of providing an adequate diet. 
A)  five times the cost of providing an adequate diet. 
B)  four times the cost of providing an adequate diet. 
C)  three times the cost of providing an adequate diet. 
D)  two times the cost of providing an adequate diet.

Question 2

Table 20-11
Poverty Thresholds in 2011, by Size of Family and Number of Related Children Under 18 Years [Dollars]   Source: U. S. Bureau of the Census, Current Population Survey.
-Refer to Table 20-11. What is the poverty line for a family with one 68-year-old adult and one child?

Accepted Answer

A)  $10,788 
B)  $15,446 
C)  $15,504 
D)  $18,106 
A)  $10,788 
B)  $15,446 
C)  $15,504 
D)  $18,106

Question 3

Table 20-13
Distribution of Income in Imagination  
-Refer to Table 20-13. The Human Development Report computes a measure of inequality by dividing the income of the richest 10% of the population by the income of the poorest 10%. If the value for this measure of inequality in the US is 15.9 and the value for India is 8.6, how does Imagination compare to these two nations?

Accepted Answer

Imagination has a mo

Question 4

The goal of libertarianism is to

Accepted Answer

A)  redistribute income based on the assumption of diminishing marginal utility. 
B)  redistribute income in order to maximize the well-being of the worst-off person in society. 
C)  punish crimes and enforce voluntary agreements but not to redistribute income. 
D)  measure happiness and satisfaction. 
A)  redistribute income based on the assumption of diminishing marginal utility. 
B)  redistribute income in order to maximize the well-being of the worst-off person in society. 
C)  punish crimes and enforce voluntary agreements but not to redistribute income. 
D)  measure happiness and satisfaction.

Question 5

Based on U.S. data for 2011, the poverty rate is the highest for which group of people?

Accepted Answer

A)  children 
B)  married couples 
C)  female-headed households, no spouse present 
D)  the elderly 
A)  children 
B)  married couples 
C)  female-headed households, no spouse present 
D)  the elderly

Question 6

"An extra dollar of income gives more additional satisfaction to a poor person than to a rich person." This is an important assumption of which political philosophy?

Accepted Answer

A)  utilitarianism 
B)  liberalism 
C)  libertarianism 
D)  republicanism 
A)  utilitarianism 
B)  liberalism 
C)  libertarianism 
D)  republicanism

Question 7

Suppose the government used the following formula to compute a family's tax liability:
Taxes owed = 28% of income - $8,000. How much would a family that earned $18,000 owe?

Accepted Answer

The answer of Suppose the government used the following formula...

Question 8

The regular pattern of income variation over a person's life is called the .

Accepted Answer

The answer of The regular pattern of income variation over...

Question 9

The goal of utilitarians is to

Accepted Answer

A)  apply the logic of individual decision making to questions concerning morality and public policy. 
B)  measure happiness and satisfaction. 
C)  redistribute income based on the assumption of increasing marginal utility. 
D)  All of the above are correct. 
A)  apply the logic of individual decision making to questions concerning morality and public policy. 
B)  measure happiness and satisfaction. 
C)  redistribute income based on the assumption of increasing marginal utility. 
D)  All of the above are correct.

Question 10

An advantage of a negative income tax is that it does not encourage the breakup of families because the only criterion for assistance is family income.

Accepted Answer

A) True 
 B)False

Question 11

Figure 20-3  
-Refer to Figure 20-3. Which of the following is consistent with the data reported in the figure?

Accepted Answer

A)  Policies to reduce elderly (65 years and older) poverty rates since 1959 seem to have been effective. 
B)  The age group suffering the highest poverty rate in recent years has been 18 to 64 year olds. 
C)  Policies to reduce youth (under 18 years) poverty rates since 1959 seem to have been effective. 
D)  All of the above are correct. 
A)  Policies to reduce elderly (65 years and older) poverty rates since 1959 seem to have been effective. 
B)  The age group suffering the highest poverty rate in recent years has been 18 to 64 year olds. 
C)  Policies to reduce youth (under 18 years) poverty rates since 1959 seem to have been effective. 
D)  All of the above are correct.

Question 12

Scenario 20-1
The government is proposing switching from a progressive tax system in which families pay 15% of the first $50,000 earned, 25% of the next $50,000 earned, and 35% of any income over $100,000 to a tax system in which every family pays 20% of their income less $20,000.
-Refer to Scenario 20-1. Which group would be most in favor of the switch from the current progressive tax policy to the new policy?

Accepted Answer

A)  Utilitarians, because they want to maximize the utility to the worst-off person in society 
B)  Liberals, because of the maximin criterion 
C)  Libertarians, because they believe in diminishing marginal utility 
D)  All three groups would be equally in favor of the switch. 
A)  Utilitarians, because they want to maximize the utility to the worst-off person in society 
B)  Liberals, because of the maximin criterion 
C)  Libertarians, because they believe in diminishing marginal utility 
D)  All three groups would be equally in favor of the switch.

Question 13

Which of the following is most likely to occur when the government enacts policies to make the distribution of income more equal?

Accepted Answer

A)  a more efficient allocation of resources 
B)  a distortion of incentives 
C)  unchanged behavior 
D)  All of the above are correct. 
A)  a more efficient allocation of resources 
B)  a distortion of incentives 
C)  unchanged behavior 
D)  All of the above are correct.

Question 14

The Smith family owns an apple orchard in Illinois. The Jones family owns an apple orchard in Wisconsin. A late frost destroys half of the Smith family's harvest for one year. For the Jones family, their

Accepted Answer

A)  transitory income for the year of the frost likely exceeds their permanent income. 
B)  permanent income likely exceeds their transitory income for the year of the frost. 
C)  permanent income will be more affected by the frost than their transitory income. 
D)  Both a and c are correct. 
A)  transitory income for the year of the frost likely exceeds their permanent income. 
B)  permanent income likely exceeds their transitory income for the year of the frost. 
C)  permanent income will be more affected by the frost than their transitory income. 
D)  Both a and c are correct.

Question 15

Figure 20-3  
-Refer to Figure 20-3. In 1968, the percent of children under age 18 in poverty is

Accepted Answer

A)  higher than both the percentage of adults aged 18 to 64 and the percentage of elderly aged 65 and over in poverty. 
B)  higher than the percentage of adults aged 18 to 64 but is lower than the percentage of elderly aged 65 and over in poverty. 
C)  lower than both the percentage of adults aged 18 to 64 and the percentage of elderly aged 65 and over in poverty. 
D)  lower than the percentage of adults aged 18 to 64 but is higher than the percentage of elderly aged 65 and over in poverty. 
A)  higher than both the percentage of adults aged 18 to 64 and the percentage of elderly aged 65 and over in poverty. 
B)  higher than the percentage of adults aged 18 to 64 but is lower than the percentage of elderly aged 65 and over in poverty. 
C)  lower than both the percentage of adults aged 18 to 64 and the percentage of elderly aged 65 and over in poverty. 
D)  lower than the percentage of adults aged 18 to 64 but is higher than the percentage of elderly aged 65 and over in poverty.

Question 16

A society consists of three individuals: Larry, Margaret, and Nina. In terms of income and utility, Larry is currently best-off, Margaret ranks in the middle, and Nina is worst-off. Which of the following statements is correct?

Accepted Answer

A)  Utilitarianism suggests that government policies should strive to maximize the sum of all three individuals' utility. 
B)  Liberalism suggests that government policies should strive to maximize the sum of Larry's utility and Nina's utility. 
C)  Libertarianism suggests that government policies should strive to make Nina better off at the cost of Larry and Margaret. 
D)  Utilitarianism suggests that the government policies should strive to make Nina better off than Margaret. 
A)  Utilitarianism suggests that government policies should strive to maximize the sum of all three individuals' utility. 
B)  Liberalism suggests that government policies should strive to maximize the sum of Larry's utility and Nina's utility. 
C)  Libertarianism suggests that government policies should strive to make Nina better off at the cost of Larry and Margaret. 
D)  Utilitarianism suggests that the government policies should strive to make Nina better off than Margaret.

Question 17

Utilitarians believe that the proper goal of the government is to maximize the sum of the utilities of everyone in society.

Accepted Answer

A) True 
 B)False

Question 18

In 2011, the poverty rate in the United States was

Accepted Answer

A)  5.9 percent. 
B)  11.1 percent. 
C)  15.0 percent. 
D)  22.4 percent. 
A)  5.9 percent. 
B)  11.1 percent. 
C)  15.0 percent. 
D)  22.4 percent.

Question 19

A common criticism of welfare programs is that they

Accepted Answer

A)  create self-reliant individuals. 
B)  encourage strong family values. 
C)  encourage illegitimate births. 
D)  have increasing benefits over time, in real terms. 
A)  create self-reliant individuals. 
B)  encourage strong family values. 
C)  encourage illegitimate births. 
D)  have increasing benefits over time, in real terms.

Question 20

Scenario 20-4
Suppose the government implemented a negative income tax and used the following formula to compute a family's tax liability:
Taxes owed = (1/5 of income) - $15,000
-Refer to Scenario 20-4. Below what level of income would families start to receive a subsidy from this negative income tax?

Accepted Answer

A)  $5,000 
B)  $15,000 
C)  $50,000 
D)  $75,000 
A)  $5,000 
B)  $15,000 
C)  $50,000 
D)  $75,000

Exam 20: Income Inequality and Poverty

The federal government sets the poverty line at roughly

Table 20-11 Poverty Thresholds in 2011, by Size of Family and Number of Related Children Under 18 Years [Dollars] Source: U. S. Bureau of the Census, Current Population Survey. -Refer to Table 20-11. What is the poverty line for a family with one 68-year-old adult and one child?

The goal of libertarianism is to

Based on U.S. data for 2011, the poverty rate is the highest for which group of people?

"An extra dollar of income gives more additional satisfaction to a poor person than to a rich person." This is an important assumption of which political philosophy?

Suppose the government used the following formula to compute a family's tax liability: Taxes owed = 28% of income - $8,000. How much would a family that earned $18,000 owe?

The regular pattern of income variation over a person's life is called the .

The goal of utilitarians is to

An advantage of a negative income tax is that it does not encourage the breakup of families because the only criterion for assistance is family income.

Figure 20-3 -Refer to Figure 20-3. Which of the following is consistent with the data reported in the figure?

Which of the following is most likely to occur when the government enacts policies to make the distribution of income more equal?

The Smith family owns an apple orchard in Illinois. The Jones family owns an apple orchard in Wisconsin. A late frost destroys half of the Smith family's harvest for one year. For the Jones family, their

Figure 20-3 -Refer to Figure 20-3. In 1968, the percent of children under age 18 in poverty is

A society consists of three individuals: Larry, Margaret, and Nina. In terms of income and utility, Larry is currently best-off, Margaret ranks in the middle, and Nina is worst-off. Which of the following statements is correct?

Utilitarians believe that the proper goal of the government is to maximize the sum of the utilities of everyone in society.

In 2011, the poverty rate in the United States was

A common criticism of welfare programs is that they

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Application: the Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

The Theory of Consumer Choice

Frontiers of Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Trade-Off Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

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